Napier Rural Residential Rate Payers can expect another significant rates increase.

As a final phase of rating policy changes started by Mayor Wise (which reduced differentials from 27.3% to 10%) the Council are again planning to increase the proportion of rates the rural residential rate payers contribute.

Council are planning to remove the current significantly smaller 10% differential for rural residential rate payers, with the intent of charging rural residential ratepayers at 100% the same level as their urban counterparts.

If you oppose the changes to the rating policy, you need to visit 'Say it Napier' website and lodge your submission.

Unless volumes of ratepayers make submission citing the inequity of the proposal, Rural Residential Rate payers can expect another considerable rate hike in the order or 10+8.8% following several years of incremental differential reductions (17.3% more in rate increases than their urban counterparts over the same period).

I encourage you to watch the recording of Council meeting on 3 March 2026 (Ordinary Meeting of Council - 3rd March 2026 - YouTube) at the: at the 2-minute mark the proposed amendment to the rating and revenue policy were explained with three options to be consulted on, at 6:45, the removal of the 10% rural residential differential is stated and the UAGC is confirmed at 22% and the option of changing to Capital Value Rating is dismissed, at 10:04, I express concerns about inequity (see the notes below the tables)

at 12:04, I explain the potential failure to take into account Section 2 of Schedule 2 of the Local Government (Ratings) Act 2002.

at 14:05, Councillor Brownlie spoke in support of my concerns

This is not the first time over the last six years that I have attempted to explain the inequity of rates increases specifically targeting rural rate payers.

In 2017 a review of the rating policy stated

In 2021 a review of the rating policy was to immediately increase rural and rural residential rates with significant removal of differentials, at my insistence these changes were staged over three years and increase the UAGC was increased to 22% to spread 2% of the burden across all rate payers.

the current Revenue and Financing policy states differentials as

Notes:

I spoke against the recommendation, specifically, against just two components

1.      The removal of the rural residential differential, and

2.      The retention of land Value as the assessed ratable value

In reading the report to Council there are a few contradictions.

First let me explain where land value rating came from and why it is now so out of date

In 1878 the government imposed a direct tax on all landowners based on the value of their land. That was a central government tax which was replaced by income tax increases around 1960’s.

In 1878 the only reason land tax was equitable, was that at that time land lots were only registered in two sizes ¼ acre lots or 100 acre lots and each lot was taxed equally

Local government followed suit but recognised that levels of service were different so ¼ acre lots were charged the full amount of rates (the land tax) while rural 100 acre lots who didn’t receive the same level of service paid a differential of the rates (the land tax).

By the mid 1970’s district plans encouraged subdivision and consequently in urban areas most lots were subdivided either as a means of equity conversion to cash or as rates became unaffordable the property was subdivided to reduce the rates burden on the single rate payer, a problem halved is a problem shared.

By the mid 1980’s it was recognised that land value rating systems were no longer equitable on the basis that the size of land lots were so variant and around 1984 the rating act was amended to allow three options land value rating, or capital value rating or a mix of Land and Capital value rating.

Currently 36 (21+12+3) councils use Capital or Mixed value rating, only one other City council uses Land Value (4 use mixed).

I want to talk about equity being fair and reasonable,

-       A property owner in the urban area of Napier with a 1.5 hector lot can subdivide

-       But a rural residential property owner with a 1.5 hector lot cannot subdivide

-       This is because as a council the district plan that we set or the subdivisional code of compliance that we set may prohibit such subdivisions.

-       There for we have removed a liberty that we have made available to other property owners while now proposing to remove a differential that recognised the inequity that we impose

I now ask have you have read the Local government (Rating) Act 2002.

And I refer to Schedule 2 with the heading  which asks us to consider ‘Matters that May be used to define categories of rateable land’ s2 states that ‘the activities that are permitted, controlled, or discretionary for the area in which the land is situated, and the rules to which the land is subject under on operative district plan”

And I ask if we have prohibited a landowner of a remedy to reduce their rates burden have we been fair and reasonable when we impose that same rate without recognising the differential